AU: Labour Force Survey


Wed Sep 13 20:30:00 CDT 2017

Consensus Actual Previous Revised
Unemployment 5.6% 5.6% 5.6%
Employment 15,000 54,200 27,900 29,300
Participation Rate 65.1% 65.3% 65.1%

Highlights
Australia's labour market saw an increase of 54,200 in the number of employed persons in August (seasonally adjusted), up from the 27,900 increase recorded in July and exceeding the consensus forecast for an increase of 15,000. The unemployment rate was steady at 5.6 percent in August, in line with the consensus forecast, while the participation rate rose from 65.1 percent to 65.3 percent, above the consensus forecast of 65.1 percent.

The increase in headline employment in August was driven mainly by full-time jobs, which increased by 40,100 persons after a decline of 19,900 persons in July. Part-time employment also increased by 14,100 persons after an increase of 49,100 persons in July. The total number of hours worked in August increased by 0.4 percent. Over the last twelve months, seasonally-adjusted full-time employment has increased by 251,200 persons, while part-time employment has increased by 74,500 persons.

The number of people looking for work fell by 1,100 in August with the unemployment rate, at 5.6 percent, matching its lowest level since early 2013. The increase in the participation rate extends its recent strong upward trend and takes it to its highest level since 2011.

Today's data shows employment growth remains strong, in line with the assessment of recent labour market conditions by officials at the Reserve Bank of Australia. Officials also expect this to translate into stronger wage growth in time, consistent with their forecast for a gradual pick up in inflation.

Definition
The Labour Force Survey is a key economic indicator giving an overall picture of employment and unemployment. Employment counts the number of paid employees working part-time or full-time in the nation's business and government establishments. The unemployment rate measures the number of unemployed as a percentage of the labour force.

Description
This report is used as an indicator of the health of the domestic economy. Employment trends highlight the strength in job creation and the implications for future sectoral activity. The unemployment rate is used as an indicator of tightness in labor markets and can foreshadow a future increase in wages. Labor force data provide investors with the earliest signs of industry performance. While other data are produced with a month or two delay, these data are available only a week to 10 days after the end of the latest month. Reactions can be dramatic - especially when the result is unanticipated.

The information in the report is invaluable for investors. By looking at employment trends in the various sectors, investors can take more strategic control of their portfolio. If employment in certain industries is growing, there could be investment opportunities in the firms within that industry.

The bond market will rally (fall) when the employment situation shows weakness (strength). The equity market often rallies with the bond market on weak data because low interest rates are good for stocks. But sometimes the two markets move in opposite directions. After all, a healthy labor market should be favorable for the stock market because it supports economic growth and corporate profits. At the same time, bond traders are more concerned about the potential for inflationary pressures.

The unemployment rate rises during cyclical downturns and falls during periods of rapid economic growth. A rising unemployment rate is associated with a weak or contracting economy and declining interest rates. Conversely, a decreasing unemployment rate is associated with an expanding economy and potentially rising interest rates. The fear is that wages will accelerate if the unemployment rate becomes too low and workers are hard to find.